At 2pm last Thursday 60 Wall Street Journal reporters gathered in the lobby of Tower One of the World Financial Centre in the heart of New York's business district to protest against Rupert Murdoch's bid for their paper.

The opulent Eighties building on the banks of the Hudson is home to the Journal's parent company, Dow Jones, the target of a $5bn offer from News Corp, the £68bn media conglomerate that Murdoch chairs. It was a hot day, and the 40-storey glass skyscraper, built in the shape of a pyramid, shimmered in the afternoon sun. For Murdoch, the paper it houses represents a glittering prize.

'Every newspaper proprietor covets an asset like the Journal or the Financial Times,' says one media banker, 'They are the biggest brands with a global reach.' The 76-year-old mogul was in Poland last week, but told journalists he wanted to conclude the deal within three weeks 'or not at all'. But all the signs are that the Bancroft family, who effectively control Dow Jones, are close to agreeing, two months after News Corp tabled a $60-per-share offer.

The journalists gathered in the Journal's head office, and around 150 more who took part in the protest at bureaux across the US, were distinctly uncomfortable at the prospect of being owned by Murdoch. 'We wanted to make a very pointed public statement,' says ES 'Jim' Browning, the staffer who organised the demonstration. 'Dow Jones is not in financial trouble and it was not looking for a buyer. This came out of nowhere. It is an opportunistic move by a guy who sees huge potential in the company. The potential of the brand is limitless. If Murdoch is allowed to buy it, and then trash it, it would be a tragedy.'

Murdoch is accustomed to being demonised, and despite the largely negative coverage in the American media in the last few weeks, there seems little chance the deal will be derailed.

Journal staff are pinning their hopes on a 'white knight' bidder emerging, although the chances of one have looked slim since FT owner Pearson decided not to proceed with an offer late last month. Failing that, staff hope the Bancroft family, who hold 64 per cent of Dow Jones's voting shares, may change their mind about selling - despite reaching an agreement with Murdoch over measures to guarantee its editorial independence.

The deal nearly collapsed after Bancroft representatives demanded a veto on senior editorial appointments, but it appears to be back on track after Murdoch threatened to walk away. 'They're taking $5bn out of me and want to keep control, in an industry in crisis,' he told an aide when he heard their demands. 'They can't sell their company and still control it - that's not how it works. I'm sorry.'

Leslie Hill, a Bancroft family member who sits on the Dow Jones board and was initially enthusiastic about the bid, is said to be casting around for a more friendly buyer. 'It's my understanding that there are some people in the family who were supportive of his takeover, who are now desperately trying to put the cork back in,' Browning says.

In the meantime, feelings are running high at the paper, where senior managers have been promised a share of a $50m windfall should they be made redundant when the deal goes through. Browning claims many of them share their journalists' scepticism about Murdoch, but they were unhappy about last week's protest. 'Some of them are trying to make their peace with Murdoch. We got a testy email from managing editor Marcus Brauchli [following last week's protest] which had obviously been written by lawyers.' It told them their action wasn't permitted and could result in disciplinary action.

The Journal's highly regarded editorial team fears Murdoch will change the content and take it downmarket, although it is difficult to see why an astute businessman like Murdoch would risk damaging the paper's high-brow appeal. There is little doubt he will make changes, however. 'He has enormous editorial flair,' says one of his former journalists. 'He could make the Journal into a much better product.'

In a recent interview with the New York Times, Murdoch confessed: 'I'm sometimes frustrated by the long stories,' adding that he rarely gets around to finishing some articles. He told the Times he likes the paper's neo-conservative comment pages, but would like to see more political coverage in the news pages and, just for good measure, added that he wasn't a huge fan of the Saturday Journal either.

Many in the US media point to the Times and its sister Sunday title, which have become more populist since Murdoch bought them. 'They are not terrible papers, but they used to be great papers,' Browning says.

Should it go through, the purchase will have major ramifications for Murdoch's market-leading British newspapers. Last weekend, senior News International executives gathered at the Devon country home of Sunday Times editor John Witherow to celebrate his wife's 50th birthday. Sources say their boss's attempt to buy the Journal was not discussed over the canapes. If so, it must be the only gathering of journalists, on either side of the Atlantic, at which the bid has not been the main topic of discussion.

Like the presses that publish News International's four national titles, the rumour-mill at Wapping rarely stops running and it was powered by the presence at the birthday party of Daily Telegraph editor Will Lewis, a former Sunday Times business editor, who is reviled by some Telegraph journalists for introducing new working practices, but admired by management for dragging the paper into the 21st century. He shunned his company's annual party, held the same night at Leeds Castle in Kent, to attend Witherow's bash and some see that decision as symbolic. 'Could he take over the top job at the Times? Yes,' says a senior newspaper executive. 'He could also do the same job at the Journal,' he adds, although Murdoch has said publicly he will not remove Brauchli. '[Lewis] worked in New York for a time at the FT and kicked the Journal's arse.'

Others speculate that the man who runs Murdoch's British papers, News International chairman Les Hinton, could take charge of the Journal if the bid is successful, and that Witherow, who has edited the Sunday Times for over a decade, could take Hinton's job. That would prompt another round of musical chairs, with either Lewis, or former Times business editor Patience Wheatcroft returning, although one former executive says: 'Patience is too old. Look back at the editors Rupert has hired. Except in a crisis situation, they have all been young because he knows they will work hard.'

Other Murdoch favourites are believed to include the Times US editor Gerard Baker and current Times business editor James Harding, although one former News International journalist claims: 'Rupert doesn't have any Wapping journalists who he is particularly close to. The person he's closest to is [Times editor Robert] Thomson, but that's because he used to work in Washington.' Speculation about the role Thomson has played in the Journal bid has been exaggerated, say others, although it seems likely he knew about it before it happened.

Thomson is friends with Brauchli and the two men are thought to have dined together in New York recently.

The real beneficiary of a successful bid is likely to be James Murdoch, Rupert's youngest son from his second marriage. He currently runs BSkyB, but his father has consulted him extensively about the acquisition and there are rumours he could move to the US to run the paper. Sky is facing more competition than at any time since its inception, and it could ill-afford to lose its youthful chief executive, but media industry insiders point out there is a ready-make replacement in the form of Tom Mockridge, the highly-rated CEO of Sky Italia.

If Murdoch Jr does take charge, he will play a part in shaping the paper's strategy. It has an enviable internet presence and was one of the first publications to charge for online content, but some believe it could make more money by giving it away and raising advertising rates. 'Murdoch's got less of an idea what to do with it than people think,' says one industry source. 'He's less of a strategist than some suppose - more of a sharp tactician.' Perhaps, although Murdoch has said Dow Jones would be used to supply content to his planned Fox News business channel, and claims that alone justifies the $5bn price tag. He will also want to take on the Financial Times, a paper he has long coveted.

At a glittering party 10 days ago at London's Victoria & Albert museum, the FT's clean-cut editor, Lionel Barber, addressed an audience of businessmen, bankers and newspaper proprietors. 'We were going to invite Rupert Murdoch, but we hear he's got a little media deal to take care of,' he quipped. An hour earlier, the paper's parent company, Pearson, announced it had decided to abandon a counter-bid for Dow Jones with General Electric, the US conglomerate whose media assets include business news channel CNBC.

Pearson chairman Glen Moreno says several companies had approached the FT owner asking it to table a joint bid for Dow Jones, but General Electric, which owns CNBC, was regarded as the only credible partner. CNBC has a content deal with Dow Jones, but it expires in a few years' time. If Murdoch buys the company, he is expected to terminate that agreement because he will want Dow Jones to supply his Fox News business channel. Pearson is still talking to General Electric about a 'strategic partnership' in the hope that the FT can replace Dow Jones as CNBC's editorial partner, but that is a consolation prize. GE was serious about a counter-bid, and is said to be unimpressed by Pearson's decision to walk away.

For FT journalists, the prospect of its bitter rival being owned by a newspaper genius with deep pockets is daunting. Murdoch tried to buy the FT in the 1980s, but according to one industry source, he was treated 'like a colonial upstart' by its board. 'Rupert used to say he'd love to buy the FT, but always believed the establishment would stop him,' says a former News International journalist. Buying the Wall Street Journal might prove a satisfying revenge.

Who are the Bancrofts

Like many family dynasties who control companies founded or owned by their forefathers, the Bancrofts rarely speak with one voice. Descendants of Hugh Bancroft, who ran the Dow Jones company for just five yeas, from 1928-33, have little in common other than their wealth.

Around 36 Bancroft family members, including William C Cox III - who has supported Murdoch's bid - control Dow Jones through a family trust that owns 64 per cent of the company's voting stock. But although the family has jealously guarded the organisation's independence, particularly that of its flagship asset the Wall Street Journal, many of its youngest members have little affection for the company. Some would rather cash in now than risk seeing the value of their shareholding decline.

They are regarded as good owners, rarely visiting its New York head office and only attending board meetings. However, some industry analysts have criticised them for taking too much money from the company in the form of dividends at time when it needed to invest in new technology.